Reflecting on the Housing Bubble

In my more than 10 years of writing about housing and growth, there's one lesson that has been clear throughout — nobody can predict the future.

Of the thousands of people I've interviewed in that time, everyone from homeowners to builders to investors to governors, I can only identify one or two who did not form their opinion based upon pride, personal gain, employer's gain, or some bizzare belief that denying bad things will somehow prevent them from happening.

Perhaps my understanding of this is the natural progression of human development. Through the experience of listening to more and more bullshit I've managed to tune the meter in my head. As it has been proved right time and again, I have learned to rely upon it, whether it's some industry public relations agent spinning the latest sky-is-falling news into touch-the-sky bliss, or some politician who believes his constituents will rise up and vote him out if the market falls on his watch, regardless of whether there was really anything that government could have done about it.

It is also human nature for reporters to form their own opinions. Sometimes we're right, but when it comes to housing, we're usually wrong. This, I expect, is because we have a personal stake. I've always thought about it in the same way as I do horse racing. I can write about the ponies with brilliance, and pick 9 out of 10 races, if all I'm doing is writing about it. But the minute I try to put that brilliance to work for me personally and lay some dollars down on a race, I lose, lose, lose everytime. It's the personal stake that blinds me, it blinds all of us.

My point is, when it comes to housing, we all have a stake, whether we're lucky enough to own, or, like my wife and I, unlucky enough not to own. Can any of us be objective? I'm sure there are a few untainted, unbiased geiniuses out there among the millions. But which ones are they? Deciding who those people are is like picking the Kentucky Derby winner for 2008 from the thousands of horses that did their usual morning workouts today on tracks from England to Australlia. The winner's out there, but where?

What we're left with is instinct. My instinct tells me that this market is about to crash hard, but what do I know? All I really know is what I want. And how horrible is that? On one hand, I don't want anyone to get hurt financially or otherwise. But, on the other hand, I want this market to crash for my own personal gain, so my wife and I can finally afford a single-family home and start a family of our own. How do you reconcile that?

— The Boy in the Big Housing Bubble